India Hikes Gas Price for Difficult Fields, Impacting PNG and CNG

The Indian government has raised the ceiling price for natural gas produced from difficult fields to $9.89 per million British thermal units (MMBtu), a 10% increase from the previous rate of $8.90 MMBtu.

This new price cap will apply to gas produced from deepwater, ultra-deepwater and high-pressure, high-temperature fields such as the KG-D6 block of Reliance Industries and Bharat Petroleum.

The government aims to incentivize Oil and Natural Gas Corporation (ONGC) and Oil India Ltd to invest in developing additional reserves by offering a higher price for new-well gas. The effective price for new-well gas would be up to $7.70 per MMBtu after the APM price for October was capped at $7/MMBtu.

The price hike is expected to affect PNG and CNG prices, which may witness a substantial increase due to higher input costs.